Halifax figures reveal property cost rise

A further indication that the housing market is regaining its strength was seen today when figures from the UK's biggest mortgage lender showed that the cost of property rose by 1.3% in July.

Halifax attributed the strong rise, which is the highest since February and more than twice June's rate of 0.6%, to low interest rates and low levels of unemployment.

The combination continues to underpin the housing market, and the price of the average house in the UK has now risen to ?132,079.

According to the Halifax figures, annual house price inflation currently stands at 19.2%.

The figures reflect the trend seen by the Nationwide building society, which reported a monthly price rise of 1% when it published its results last week.

The Halifax chief economist, Martin Ellis, expressed his confidence in the market following the latest set of results.

"The housing market is strong," he said. "With mortgage rates at a 50-year low, benign employment prospects and affordability levels well below the long term average, the housing market continues to be underpinned by strong fundamentals."

Despite renewed anxiety over the UK's record levels of consumer debt, a combination of cheap mortgages and relatively high wages has meant that levels of affordability (the percentage of income that goes on a mortgage) is good, further contributing to the health of the market.

However, while the future of the market looks bright in the short term, Halifax's survey shows that long-term growth may be threatened by a fall in the number of first-time buyers.

Traditionally, housing price growth has been sustained by an imbalance of supply and demand in the housing market, with high numbers of first-time buyers pushing up the prices of a limited amount of available properties.

While Halifax was quick to say that there was still a "chronic shortage" of houses, it confirmed that the number of first-time buyers entering the market is currently at its lowest level since records began in 1974.